[New-hampshire-students] Fw: [NFBAffiliatePresidents] Handout from President and treasurerseminar
Marie Johnson
jomar2000 at comcast.net
Mon Dec 17 23:07:35 CST 2007
Hi folks, attached and pasted below is the handout that Ron Gardner of the
NFB whipped up for everyone to carefully read and safekeep. See Ron's
original email at the bottom of this post.
It is rather lengthy, but of the utmost importance and I trust that all of
you will read it and keep a copy in your files. It contains info that also
pertains to receipts that chapters may need to write out in the future as
well as affiliate financial concerns.
Although it was a power house weekend full of info, if there are any
questions, I should be able to recall the answers for you.
We will talk soon, at any rate, to cover any last minute details for the
Washington trip and/or any new business matters that may have come up
recently.
Here is the handout info.
*
STATE PRESIDENTS AND TREASURERS SEMINAR
1800 Johnson Street
Baltimore, Maryland 21230
December 7-9, 2007
Our NFB Affiliates -Tax-Exempt Charitable Organizations
Introduction:
Every affiliate of the National Federation of the Blind has applied for and
received a designation from the Internal Revenue Service as a tax-exempt
organization. Our affiliates are public charities and as such are required
to have boards of directors responsible to insure that revenues received and
expenses paid are tracked and recorded in an appropriate manner. Beginning
in 2008 all affiliates will be required to prepare and file an information
return or information notice with the IRS. (See details below.)
In recent years, it has been discovered that unscrupulous groups, including
terrorist groups, and dishonest individuals use fraudulent nonprofit
organizations to raise huge sums of money for other than charitable
purposes. Investigations have uncovered fraudulent transactions on the part
of some nonprofit organizations leading to the personal accumulation of
wealth by a few individuals. For these and other reasons, the Internal
Revenue Service and Attorneys General in almost all states are scrutinizing
the charitable purpose, financial responsibility, and charitable
solicitation compliance of higher numbers of nonprofit organizations.
Dr. Marc Maurer continues to insist that the National Federation of the
Blind is absolutely compliant and uncompromising with all requirements for
our nonprofit, tax-exempt organizations. He has the wisdom to implement a
nationwide compliance check among our state affiliates and local chapters
and is directing that affirmative action be taken to ensure complete
compliance with state charitable solicitation and federal tax laws. Dr.
Maurer cannot do it alone. It is critical that state affiliate presidents,
treasurers, and boards of directors learn what is required and do what is
necessary to ensure compliance. The information below is intended to
provide general information and is not an exhaustive treatise on any of the
subjects covered. It is hoped that by becoming more familiar with and
actively involved in issues such as charitable solicitation laws, financial
and corporate reporting requirements, fundraising, and overall nonprofit
corporation structure, we can ensure that all affiliates and chapters are as
compliant and uncompromising as is our national organization.
Tax-Exempt Status
Nonprofit organizations that wish to receive tax-exempt recognition from the
IRS must be organized and operated exclusively for charitable purposes.
Because of the clearly defined charitable purposes and activities of the
National Federation of the Blind and its affiliates, the issue of whether we
have a charitable purpose cannot be seriously questioned. Charitable,
educational, scientific, literary, and testing for public safety are a few
of the activities enumerated in federal law in which the National Federation
of the Blind is clearly engaged. Documenting our pursuit of charitable
purposes is one of the important reasons all affiliates should take and
maintain minutes of its state convention and board of directors meetings.
To be tax-exempt, the organization must be a corporation or other acceptable
organization. Dr. Maurer is encouraging all affiliates to become
incorporated and to maintain their corporate status in good standing with
their respective state or jurisdiction. Each of our state affiliate
organizations must maintain its corporate status and thereby meet the
requirement of being an acceptable organization.
It is critical that our affiliates receive and maintain a copy of the
"tax-exempt" status notification from the Internal Revenue Service (IRS).
This designation is made under the Internal Revenue Code Section 501(c)(3).
Each nonprofit corporation is then recognized as a "501(c)(3) organization."
This tax-exempt status allows donations to our nonprofit national
organization and state affiliates to be deducted from the income tax of the
donor, and revenue generated for charitable purposes by the corporation is
exempt from taxation. It is important that each affiliate maintain and have
available for inspection a copy of the letter from the Internal Revenue
Service in which the tax-exempt status under 501(c)(3) is designated.
Form 1023 Application for Recognition of Exemption under Section 501(c)(3)
of the Internal Revenue Code
Our affiliates have been recognized as 501(c)(3) organizations. In order to
obtain that status, it was necessary to ensure that activities comply with
federal law. Following are two examples of the items addressed during the
application process. It is important that our affiliate officers and leaders
are familiar with these requirements and take steps to ensure continued
compliance:
Personal Gain
No part of the organization's net earnings will inure to the benefit of
members or individuals. It must be established that the organization will
not be organized or operated for the benefit of private interests.
Political Activity--Tax-exempt organizations may not be involved in
political campaigns. The organization will not, as a substantial part of its
activities, attempt to influence legislation or participate to any extent in
a political campaign for or against any candidate for public office. If any
activity (whether or not substantial) of our organization consists of
participating in, or intervening in, any political campaign on behalf of (or
in opposition to) any candidate for public office, our organization may not
qualify for or maintain tax-exempt status under 501(c)(3). Providing
information and education to elected officials constitutes part of our
charitable purpose. Individuals may participate in political campaigns, but
may not do so in the name of, or on behalf of, our organization.
Employer Identification Numbers (EIN)
The EIN is also known as a federal tax identification number. It is used to
identify a business entity. An EIN is utilized for tax filing and reporting
purposes and assists in establishing a business tax account. All affiliates
must have acquired an EIN as part of the application for tax-exempt status
whether or not they have employees.
Form 990 - Filing an Information Return with the IRS
The Form 990 series of returns are unique for three key reasons:
1. Forms 990, 990-EZ, and 990-N are not tax returns, but information
returns. Tax-exempt organizations, by definition, do not generally pay
income taxes. The primary reason such organizations file a return is not to
report taxes but to provide information on their programs and activities.
This information is used to verify that the organization is operating in
accordance with its stated tax-exempt purpose and is not violating the rules
and regulations governing tax-exempt status.
2. Tax-exempt organizations are required to make their returns widely
available for public inspection. This means that organizations must allow
members of the public to inspect the Forms 990, 990-EZ, and 990-N they file
with the IRS. Exempt organizations are also required to provide copies of
the returns when requested or make them available on the Internet.
3. Exempt organization returns are multi-jurisdictional forms, with nearly
forty states using the IRS forms to satisfy their filing requirements.
Which form to file?
Every affiliate must file a Form 990-N, Form 990-EZ, or Form 990.
Form 990-N
Beginning in 2008, even those affiliates not otherwise required to file a
Form 990 or 990- EZ will be required to file an annual electronic notice,
known as Form 990-N. This means even if the affiliate receives less than
$25,000 in gross revenues, it will be required to file this new form. This
will be similar to sending an electronic postcard to the IRS. The current
information we have is that Form 990-N will require the name of the
organization, the current board members, and current address. It is not
anticipated that more financial information will be required. Please watch
for further information on this latest development in nonprofit filing
requirements.
Form 990-EZ
An affiliate that receives $25,000 or more but less than $100,000 in annual
gross revenues may file a Form 990-EZ. This form is shorter and less
detailed than a full Form 990. An organization may file Form 990-EZ instead
of Form 990 if it meets both of the following requirements:
1. Its gross receipts are normally less than $100,000 a year, and
2. Its total assets at the end of the year are less than $250,000.
Form 990
An affiliate with gross receipts greater than $100,000 or total assets
greater than $250,000 must file Form 990.
When to File:
File Form 990-N, Form 990-EZ, or Form 990 by the 15th day of the 5th
month after the affiliate's accounting period ends. In other words most
affiliates must file their returns on or before May 15th each year.
A Form 8868, Application for Extension of Time to File an Exempt
Organizations Return, may be used to request an extension of time to file
Form 990 or Form 990-EZ. Generally, the Internal Revenue Service will not
grant an extension of time for more than 90 days. If more time is needed, a
second Form 8868 may be filed for an additional 90-day extension. This will
be granted only in cases of undue hardship. In no event will an extension
of more than six months be granted to any domestic organization.
Penalties for Late Filing or Failure to File 990 or 990-EZ Returns
Against the Organization: A penalty of $20 a day, not to exceed the lesser
of $10,000 or 5 percent of the gross receipts of the organization for the
year, may be charged when a return is filed late, unless the organization
can show that the late filing was due to reasonable cause. An organization
that fails to file Form 990-N, Form 990-EZ, or Form 990 for three
consecutive years will have its tax-exempt status revoked as of the filing
due date for the third return. An organization whose exemption is revoked
must apply for reinstatement by filing an application (Form 1023) and paying
a user fee. This is not something any affiliate will want to do.
Against Responsible Person(s): If the organization does not file a complete
return or does not furnish correct information, the IRS will send the
organization a letter that includes a fixed time to fulfill these
requirements. After this period expires, the person failing to comply will
be charged a penalty of $10 a day, not to exceed $5,000, unless he or she
shows that failure to comply was due to reasonable cause. If more than one
person is responsible, they are jointly and individually liable for the
penalty.
Important: Beginning in 2008 every affiliate will be required to file a
Form 990-N (e-postcard), Form 990-EZ, or Form 990. Because the IRS can
impose penalties of up to $20 a day for every day that an affiliate fails to
file its required return, it is critical that we provide financial
information including bank statements and cancelled checks to our National
Center. Our National Center staff will then assist affiliates in preparing
and timely filing the required return.
Requirement for providing information to donors
If a donor makes a contribution of $250 or more and receives nothing in
return from our organization, the donor must request a written
acknowledgment of the contribution to be able to receive a deduction on
their tax return. It is not our responsibility to provide this particular
acknowledgment, but we can assist a donor (and hopefully get future
contributions) by providing a timely, written statement containing the
following information:
1. name of our organization
2. amount of cash contribution
3. description (but not the value) of non-cash contributions
4. statement that no goods or services were provided by the organization
in return for the contribution, if that was the case
5. description and good faith estimate of the value of goods or services,
if any, that an organization provided in return for the contribution
The written acknowledgement must be obtained by the donor no later than the
date the donor actually files a return for the year the contribution is made
or the due date of the return (including extensions). The written
acknowledgement can be either a paper copy or can be transmitted to the
donor via an e-mail addressed to the donor. The donor should not attach the
written acknowledgement to their tax return but should maintain it to
substantiate the contribution.
Separate contributions of less than $250 will not be aggregated. For
example, monthly contributions through our PAC Plan of less than $250, even
though the donor's annual total contributions are $250 or more, do not
require a written acknowledgement from our organization. However, best
practice requires and promoting good will suggests that we acknowledge
contributions we receive from donors regardless of the dollar amount.
Charitable Registration and Solicitation
Most states, according to the National Association of State Charity
Officials (NASCO), require charitable organizations to register with their
state agency that governs these organizations. Generally, any nonprofit
organization that conducts charitable solicitations within the state, by any
means, is required to register. Typically, a charitable organization must
register with the state agency prior to soliciting the state's residents for
contributions. Additionally, organizations may be required to file periodic
financial reports. Some states may also require charitable organizations to
register with municipal or other local governments.
Keeping and maintaining records
Exempt organizations must keep records as long as they may be needed to
administer provisions of the Internal Revenue Code. Generally, this means
you must keep records that support an item of revenue or deduction on a
return until the period of limitations for that return runs out. The most
common limitations period is three years after the date the return is due or
filed, whichever is later.
Permanent Records to be kept by the affiliate
Some records should be kept permanently. These include the application for
recognition of exempt status, the determination letter recognizing exempt
status, and organizing documents such as articles of incorporation and
by-laws, with amendments.
----- Original Message -----
From: "Ron and Jan Gardner" <ronandjan at qwest.net>
To: "'NFB Affiliate Presidents List'" <nfbaffiliatepresidents at nfbnet.org>
Sent: Monday, December 17, 2007 3:17 PM
Subject: [NFBAffiliatePresidents] Handout from President and
treasurerseminar
> Dear Affiliate Presidents,
>
> As directed by Dr. Maurer, I am attaching for each of you a copy of the
> handout which I prepared for Dr. Maurer prior to the President and
> Treasurers seminar. It covers most of the points that were raised
> regarding
> our NFB Affiliate Corporations. I am happy to answer questions or assist
> in
> any way.
>
> Warmest regards and Merry Christmas,
>
> Ron Gardner
>
--------------------------------------------------------------------------------
> _______________________________________________
> NFBAffiliatePresidents mailing list
> NFBAffiliatePresidents at nfbnet.org
> http://www.nfbnet.org/mailman/listinfo/nfbaffiliatepresidents
>
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